Rjr Nabisco Considers Selling Its Kentucky Fried Chicken Unit

May 23, 1986|By John Gorman.

RJR Nabisco Inc. is considering the sale of its Kentucky Fried Chicken restaurant unit, a sale that could net $1 billion for the tobacco and food giant, according to Dean Witter Reynolds analyst David Goldman.

RJR closed at $45, up $1.62, in trading on the New York Stock Exchange.

Together with the expected sale of RJR`s Canada Dry and Sunkist soft-drink operations to Cadbury Schweppes PLC of London, RJR could realize about $1.5 billion, Goldman said in a telephone interview.

Goldman said RJR President F. Ross Johnson told consumer analysts at a Wednesday meeting in New York that his company was ``considering the sale of Kentucky Fried Chicken and would do it if we could see a higher return on capital elsewhere.``

Earlier in the year, RJR officials had intimated that a sale of Kentucky Fried Chicken was unlikely, Goldman said.

Late Thursday afternoon, a spokeswoman for Winston-Salem, N.C.-based RJR issued a statement that read:

``RJR Nabisco Inc. has no plans to sell Kentucky Fried Chicken Corp. As the company stated at its annual meeting last month, it will continue to evaluate and assess all of its products and businesses to be sure that resources are allocated to achieve the greatest potential return.``

Given the company`s substantial cash flow, it is possible that the $1.5 billion would be used to repurchase preferred stock, resurrect its common stock buy-back program or pay some debt incurred in recent acquisitions, Goldman said.